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Module 1
Module 1
Introduction
http://www1.secam.ex.ac.uk/famous-forecasting-quotes.dhtml
Quotes about Forecasting (cont.)
https://investorplace.com/2016/09/the-worst-phrases-that-stock-market-forecasters-love-to-assert/
Quotes about Forecasting (cont.)
https://www.marketwatch.com/story/5-quotes-that-tell-you-everything-you-need-to-know-about-forecasting-2017-01-11
Subjective Forecasting Methods
Subjective and judgmental methods are often
used when there is a limited amount of data
available.
Subjective methods may even perform better than
quantitative methods.
Very long-term predictions (e.g., 50 years out)
Quantitative models do not include the necessary types
of data.
Subjective Forecasting Methods (cont.)
Guess
Sales-force composite – ask people closest to the
problem to make forecasts. Ask for best, normal, and
worst cases
Jury of executive opinion – experts deliberate as a
group
Subjective Forecasting Methods (cont.)
Delphi Method
1. Participants are selected.
2. Participants fill out questionnaire.
3. Questionnaire results are summarized.
4. Participants review and consider results to update
their forecasts.
5. Repeat until a consensus is achieved.
Disadvantages of Subjective
Forecasting
Chase,Charles W.,,Jr. (1991). Forecasting consumer products. The Journal of Business Forecasting Methods & Systems, 10(1)
What Is Business Forecasting?
Yahoo Finance
R: Create Time Series
Introduction
https://www.digitalistmag.com/customer-experience/2019/01/29/data-driven-analytics-practical-use-cases-for-financial-
services-06195123
Financial Analytics: Automate
https://www.digitalistmag.com/customer-experience/2019/01/29/data-driven-analytics-practical-use-cases-for-
financial-services-06195123
Financial Analytics: Informate
https://www.digitalistmag.com/customer-experience/2019/01/29/data-driven-analytics-practical-use-cases-for-
financial-services-06195123
Financial Analytics: Transform
• Growth
• Profitability
• Liquidity
• Cash Flow
• Valuation
• Leverage
• Portfolio Management
https://corporatefinanceinstitute.com/resources/knowledge/finance/types-of-financial-analysis/
Financial Analytics Topics
Performance Measurements
0 𝑖𝑓 𝑦" = 𝑓"
Similarity/Positional distance = %
1 𝑖𝑓 𝑦" ≠ 𝑓"
Absolute distance = ∑-"+, 𝑦" − 𝑓"
Euclidean Distance = ∑-"+,(𝑦" − 𝑓" )1
Performance Measurement
-
1
𝑅𝑀𝑆𝐸 = 𝑀𝑆𝐸 = A 𝑒"1
𝑛
"+,